Conclusion:
1. In the Cloud I have about 865 MB in the iCloud Drive.
2. By checking the iCloud Drive in the Files app I estimated the local content in the iCloud Drive to be about 100 MB.
3. The iCloud Drive indicator under Settings/General/iPhone Storage told me that the local iCloud Drive uses about 8.2 GB.
3. Conclusion: there is a huge difference between what the Files app (~100 MB) and what the iCloud Drive storage indicator (~8.2 GB) tells me to be stored locally in the iCloud Drive.
4. Solution offered by Apple: under Settings/Apple ID/iCloud turn the iCloud Drive temporarily off.
5. Result: This method reset the iCloud Drive storage indicator and freed up 8 GB of storage space.
Interpretation:
An iOS bug caused the iCloud Drive storage indicator to be way off. One possible explanation is that the iCloud Drive storage indicator failed to recalculate the disk usage after document files had been deleted from the iCloud Drive on the iPhone. By estimating the turnover of files in the local iCloud drive I find it possible that the iCloud Drive storage indicator wasn’t updated after document files were deleted for the entire usage time of the iPhone XS (~3.5 years).